Qantas to Shut Down Jetstar Asia due to escalating expenses: A challenging day ahead for staff.
In a bold move to shore up its core businesses in Australia and New Zealand, Qantas is shutting down Jetstar Asia, its Singapore-based budget carrier. A churning storm of soaring costs and gut-wrenching competition in the region has left the airline with no other choice.
The Fall of Jetstar Asia
Founded in 2004, Jetstar Asia has been a popular low-cost carrier, connecting 16 key destinations across Asia. However, the winds of change have been harsh for this aviator. Facing the sting of increasing supplier costs and crippling airport fees, as well as the redoubled claws of competitors, Jetstar Asia has reached the end of the runway. The airline's final takeoff is slated for July 31, 2025, seven weeks from now.
The Bottom Line
Qantas takes the fall with an estimated underlying EBIT loss of $35 million for this financial year before the decision to pull the plug. The closure of Jetstar Asia is poised to liberate $500 million in capital for Qantas, bolstering its landmark fleet renewal program, as it coasts towards the future. However, the closure is set to cost Qantas $175 million, with approximately a third landing in FY25 and the remainder across FY26.
Change on the Horizon
Jetstar Asia's decision won't leave scars on Jetstar Airways' domestic and international operations in Australia and New Zealand, nor Jetstar Japan. But, the closure spells the layoff of approximately 500 Singapore-based staff, who will be granted redundancy benefits and support to secure their next horizon.
"We're making bold moves that recycle capital across our business, funneling it into stronger performing segments and strategic growth initiatives like Project Sunrise," says Qantas Group CEO Vanessa Hudson. The decisions aim to tighten Qantas' grip on its core market, improve profitability, and pave the way for stronger, leaner wings.
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This, in turn, could potentially create more than 100 new jobs
"We are undertaking the most ambitious fleet renewal program in our history, with almost 200 firm aircraft orders and hundreds of millions of dollars invested into our existing fleet," Vanessa Hudson added. With this ambitious overhaul, Qantas intends to maintain its competitive edge in its core markets, improve profitability, and invest in strategic growth initiatives, such as Project Sunrise.
In the aftermath of Qantas' decision to close Jetstar Asia, the airline's Singapore-based budget carrier, the company aims to channel the freed-up capital of $500 million towards its fleet renewal program, boosting its core business in Australia and New Zealand. However, the closure comes with a price tag of $175 million, a significant portion of which is expected to be incurred in the financial year 2025.
The closure of Jetstar Asia will signal the layoff of approximately 500 Singapore-based staff, with Qantas providing support for them to secure their next opportunity in the aerospace, finance, transportation, or any other business sector.
